5. TAX CONCESSIONS AND OTHER FACILITIES
5.1 Continuous improvement
in the quality of infrastructure and human resources is an essential element
for accelerating the pace of industrialisation. Tax concessions and other
facilities also have an important role to play in laying down the priorities
5.2 The Industrial unit getting
facilities and concession under existing schemes will continue to get these
facilities and concessions for the remaining period of eligibility according
to the provision of these schemes. After the abolition of sales tax,eligible
units will continue to get the same concessions of commercial tax as per
their eligibility for remaining period of the existing schemes. Facilities
and concession at present available to industrial units will remain in
force unless expressly modified by the Industrial Policy and Action Plan,
5.3 The scheme of State Capital
Investment Subsidy, 1989 will continue to be available for small scale
units. Industrial units in the cooperative sector with a minimum investment
of rs. one crore in plant and machinery and a membership of a minimum of
one hundred persons, will also be eligible.
5.4 The facilities and concessions
announced in the policy shall be available to industrial units which go
into commercial production after the date of announcement of the Industrial
Policy and Action Plan, 1994. Industrial units which have taken the prescribed
effective steps prior to the announcement of this policy will have the
option of availing various facilities under the provisions of earlier schemes
in force, instead of the facilities available under the new Policy and
Action Plan, provided that, such units go into commercial production before
1- 4-95. Such large and medium scale industrial units, which have not gone
into commercial production but have obtained advance subsidy under the
then operational scheme of State Capital Investment Subsidy will be required
to refund to the State Government, before 1-4-95, the amount of subsidy
thus obtained if they desire to avail the facilities under the Industrial
Policy and Action Plan, 1994.
5.5 "Effective Steps" mean
fulfilling a minimum of two of the following conditions:-
- Possession of land has been taken.
- At least 50% of expenditure has been incurred of the estimated expenditure on building, as per the project report.
- Firm orders of atleast 50% of plant and machinery have been placed of the estimated plant and machinery as per the project report.
5.6 The following Sales Tax/Commercial
Tax concessions will be available to industries:-
The maximum amount of benefit
will be limited to the percentage of capital investment in fixed assets
as shown in the above column.
- At present units having capital investment in fixed assets Rs. ten lakhs get tax concession limited to the extent of 90% of the fixed capital investment. In the new scheme
the ceiling has been raised to 100% for exemption and 150% for the deferment facility.
- These concessions will be available on finished products, by- products, waste products, raw materials, incidental goods and packing material.
- Payment of tax will be deferred for a period of five years. In the sixth year the deferred amount will be due without any interest as per rules. If the deferred amount is not paid within the stipulated time limit, the units's eligibility for the balance period is liable to be cancelled and interest will be charged on such amount, as per rules.
- Units set up by Women Entrepreneurs, persons belonging to Scheduled Castes, Scheduled Tribes
and Backward Classes, will be entitled to one year's additional concession.
- After accounting for all special eligibilities, a unit will get a maximum benefit of upto an
additional five years, over and above the concessions normally available.
- Given the capping on the quantum of commercial/sales tax concession it has become necessary
to define capital investment in fixed assets. Capital Investment fixed capital assets is defined as follows:
- Investment made in land, building, plant and machinery, electric installations and pollution control equipment.
- Expenditure on land development limited to 10% of the investment made in land and building.
- Investment made for laboratory, research and on administrative building.
- Investment made in machinery and equipment for laboratory and research.
- Capital investment made on the establishment of railway siding.
- Expenditure on godown, storage tank, etc.
- The value of leased machinery and equipment required for production. (In this regard detailed definition will be issued separately).
- All items, except item (v) to (vii) will be taken into account for the small scale industries sector.
In calculating the maximum
allowable tax concessions for large and medium scale units with an investment
upto Rs. one hundred crore, the investment made by them within three years
from their going into commercial production will also be taken into account.
For industrial nits with an investment of more than Rs. one hundred crore,
the investment made by them within five years from their going into commercial
production will also be taken into account.
5.7 With a view to balance
regional development, small scale medium and large scale units set up in
"No Industry Blocks" of all the districts in the State will get the same
commercial tax concession of exemption or deferment, available in "C" category
districts. In "No Industry Blocks" of Backward "C" category districts,
an additional one year's concession will be available. "No Industry Blocks"
will be those which do not have any large or medium scale units on the
date of announcement of the Industrial Policy and Action Plan, 1994. Such
small scale industrial units (with an investment of over Rs. five lakhs
on plant and machinery) and medium and large scale units which go into
commercial production after the date of announcement of the Industrial
Policy and Action Plan, 1994 will be eligible for the special facilities
being made available in the "No Industry Blocks".
5.8 Industrial units which
will be established in areas declared as rehabilitation areas for person
displaced by submergence on account of large dams and projects will get
the same concession, as available to units in "C" category districts. Units
to be set up in such areas in "C" category district will be allowed an
additional two year's concession. Such units will be required to provide
employment to a prescribed number of displaced persons.
5.9 Units to be established
in Growth Centres developed by M.P. Audyogik Kendra Vikas Nigams with the
approval of the State Government, where expenditure on development of infrastructure
has been made, from time to time shall be eligible for commercial tax concessions,
either by way of exemption or deferment for an additional period of two
year. This concession will also be available in Growth Centres which are
approved in the future.
5.10 Units which will be
set up within five kms from the boundary of a Growth Centre due to non-availability
of land within that Growth Centre will be eligible for an additional one
year's tax concession over and above the period normally allowed in that
5.11 Industrial units commencing
commercial production after the announcement of Industrial Policy and Action
Plan, 1994 are defined as "New Units".
5.12 A new scheme will be
launched with a view to providing more opportunities of employment to bonafide
residents of the State for which additional facilities will be provided
to industries. It will be incumbent upon the industrial unit for which
land has been specifically acquired, to provide employment to one member
of the family whose land has been acquired, provided that the family has
ownership of that land for atleast twelve years. Rules for this will be
5.13 In order to develop
human resources, special financial concessions will be given to those units
which train and employ bonafide residents of the State. Such units will
be specially encouraged to provide employment to handicapped persons.
5.14 The scope of the "Thrust
Sector" has bee enlarged. The thrust sector will now include automobiles,
agricultural implements, agro-based industry, agricultural inputs, mineral
resource based industry, life saving drugs, food processing industry, fish
canning, automobile components, white goods, telecommunication and petro-chemicals
down stream projects, readymade garments, sport goods and leather and silk
industry. The list of industries covered under this thrust sector will
be declared by the State Government from time to time. There shall be no
capping on the quantum of tax concessions available to such industries,
provided that an investment of at least Rs. one crore is made in plant
5.15 New industrial units
set up in the cooperative sector with an investment of atleast Rs. one
crore in plant and machinery and a membership of atleast one hundred persons
shall be eligible for three years additional commercial tax concession
of exemption or deferment.
5.16 Additional investment
of units undertaking expansion will be eligible for commercial tax concessions,
for the same period and with the same capping as applicable to new units.
This facility will be available to units with an investment of more than
Rs. ten lakhs. Small scale units will be required to invest atleast an
additional 50% in plant and machinery, of the investment made in the existing
plant and machinery. In order to obtain the concession for expansion, large
and medium scale units with an investment upto Rs. ten crore will be required
to invest atleast an additional Rs. one crore in plant and machinery. Units
with an investment of more than Rs. ten crore will need to invest atleast
an additional Rs. five crore. The above facilities will be available for
production which is over and above 100% of the installed capacity.
5.17 During the period of
eligibility, units undertaking modernisation/diversification and producing
new items, will also be eligible for tax concession on the new items for
the remainder of the eligibility period.
5.18 Incidental goods and
capital goods will also be brought within the scope of entry tax concessions.
5.19 100% Export Oriented
Units will be specially encouraged. These units will get commercial tax
concessions for an additional period of two years and exemption from payment
of entry tax for a period of eight years.
Industrial units being set
up by Non-Resident Indians (NRI) with a capital investment of atleast Rs.
two crore shall get similar concessions which are available to EOUs, provided
that the NRI investment is atleast 50% of the equity invested by the promoters.
5.20 The Power Subsidy Scheme,
1989 stands withdrawn and the financial resources thus saved will be spent
in developing infrastructure.
5.21 From the date of declaration
of Industrial Policy and Action Plan, 1994, the maximum limit under the
scheme of interest subsidy applicable to the small scale sector stands
raised to Rs. twenty five thousand per year from the existing limit of
Rs. ten thousand per year, for general category entrepreneurs. At present,
interest subsidy is available at the rate of 4% to entrepreneurs belonging
to the Scheduled Castes and Scheduled Tribes category. From the date of
announcement of the Industrial Policy and Action Plan, 1994, the rate of
interest subsidy for Scheduled Castes and Schedule Tribes entrepreneurs
shall be increased to 6% and as was the case earlier, this will be without
5.22 Large and medium scale
units will be encouraged to promote ancillary units. An attractive scheme
shall be announced towards this end.
5.23 In order to increase
exports products manufactured in the State need to be made more competitive.
Assured quality is the key to competitiveness. Obtaining an ISO 9000 is
an important step in this direction. In this context the State Government
will provide assistance by reimbursing upto 50% of the fee paid to a recognised
5.24 The State Government
is keenly aware of the need for environmental protection alognwith rapid
industrial development. In order to encourage installation of environmental
protection equipment, such equipment will be exempt from commercial taxes.
5.25 The existing list of
units ineligible for various facilities and concession will be revised.
5.26 Special packages of
concession will be prepared to attract mega investments.
5.27 A special incentive
scheme will be prepared for all types of new units with an investment of
Rs. five hundred crore or more. Concessions, on the lines of the special
incentive scheme for the establishment of integrated steel plants with
capital investment of more than Rs. one thousand crore, excluding state
capital investment subsidy, and with modified conditions of land allotment,
etc. will be provided as incentives under this scheme.
5.28 A special package of
concessions will be prepared for all types of new units set up with an
investment of over Rs. ten crore and upto Rs. one hundred crore and another
package for new units with an investment of over Rs. one hundred crore
but less than Rs. five hundred crore.
5.29 A special scheme will
be prepared for the establishment of plants processing agricultural and